Budget 2017: £44bn committed to support housing market

Chancellor Philip Hammond has pledged a total of at least £44bn of capital funding, loans and guarantees to support the housing market over the next five years – among a raft of other measures to improve supply and facilitate construction.

The injection of £15.3bn of new financial support takes the total to at least £44bn, and will be used to create the financial incentives necessary to deliver 300,000 net additional homes a year on average by the mid-2020s. It will also be used to boost the supply of skills, resources and building land available, the chancellor said.

The specific investments announced include:

£8bn of new financial guarantees to support private housebuilding and the purpose-built private rented sector

£2.7bn to more than double the Housing Infrastructure Fund

£1.1bn fund to unlock strategic sites, including new settlements and urban regeneration schemes

£630m small sites fund to unstick the delivery of 40,000 homes

£400m for estate regeneration

£34m to develop construction skills across the country

£28m in three new “Housing First” pilots in the West Midlands, Manchester and Liverpool in an effort to tackle homelessness

Successive government failure

In his Autumn Budget speech, Hammond noted that the number of 25- to 34-year-olds owning their own homes has dropped from 59% to 38% over the last 13 years.

“Put simply, successive governments over decades, have failed to build enough homes to deliver the home owning dream that this country has always been proud of,” he said.

In an effort to help young first-time buyers (FTBs), Hammond slashed stamp duties, but stressed that measures to boost demand also needed to be countered by similar increases in supply.

“If we don’t increase supply of land for new homes, more money will inflate prices, and make matters worse,” said Hammond.

To that end, local authorities will now have the power to charge a 100% council tax premium on empty properties.

It was also announced that New Town Development Corporations will be used to kickstart five new locally agreed garden towns in areas of demand pressure – and will be delivered through public-private partnerships.

Following from a National Infrastructure Commission report published last week, Hammond also made a commitment to building up to one million homes in the Cambridge-Milton Keynes-Oxford corridor by 2050. And as a “down-payment on this plan,” a housing deal with Oxfordshire has also been agreed to deliver 100,000 homes by 2031.

Not just money

However, the chancellor also stressed that financial measures alone will not be enough. He said: “Solving the housing challenge takes more than money, it takes planning reform.

“This is a complex challenge, there is no single magic bullet.”

He said that focus will be on making the best use of urban land – where people want to live and where most jobs are created – while continuing the protection of the green belt.

Moreover, Hammond said councils in high demand areas would permit more homes for local FTBs and affordable renters.

The chancellor also emphasised the crucial need for skills training: “If we don’t train the construction workers of tomorrow. We may generate planning permissions, but we will not turn them into homes.”

In addition, taking note of the “significant gap” between the number of planning permissions granted and the number of homes built, Hammond has established an urgent review to examine the gap between planning permissions and housing starts

“If it finds that vitally needed land is being withheld from the market for commercial, rather than technical reasons, we will intervene to change the incentives to ensure such land is brought forward for development,” he said.

An interim report will be delivered before the Spring Statement next year.

New players

To encourage bringing in new players to the construction sector, Housing Revenue Account (HRA) caps for councils in high demand areas will be lifted to increase building activity.

“If we don’t do more to support the growth of the SME housebuilding sector, we will remain dependent on the major national housebuilders that dominate the industry,” said Hammond.

Furthermore, in order to provide developers with “encouragement and persuasion,” and to provide local authorities with help and support – the Homes and Communities Agency will expand to become “Homes England”, and will be responsible for bringing together money, expertise, and planning and compulsory purchase powers to facilitate the delivery of new homes.

“By choosing to build,” he continued, “we send a message to the next generation that getting on the housing ladder is not just a dream of your parents’ past, but a reality for your future.”

You may also be interested in

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.

NEWSLETTER SIGN UP

For just two more minutes of your time, you can register for premium access

Specialist lending newsletters

Access to exclusive content

Priority event notifications

Business information tailored specifically to your business needs

Engage in interactive commenting and voting in our weekly polls

Specialist Lending Newsletter

You may also be interested in the Specialist Lending Solutions newsletter. All the latest news, analysis and insight from the mainstream residential lending market. Including industry news, adviser business strategy tips and market commentary.

Email address

First name

Surname

Postcode

LOGIN

please sign-in using your email and password

Success....

Please enter your email address and we will email you a link where you can change your password.

Premium access

Register to gain access to MortgageSolutions.co.uk for the latest news analysis, interactive comment, industry video and features, all at your finger tips. Vote in our polls, get your opinion across on the news and watch out for our weekly editorial round-up features.

Delegate places are free of charge, subject to approval by the organisers based on job criteria

Registered delegates have access to the seminars where applicable. You will be given an identification badge, which must be shown upon request.

Once you have registered and your application has been accepted, then you are expected to attend. If you are subsequently unable to attend, please make sure your notice of cancellation is sent at least three weeks prior to the date of the event.

All cancellations must be received in writing. You will receive confirmation of your cancellation. Suitably qualified replacements may be sent if you are unable to attend; however, the organisers must approve them before the event takes place.

Should you be unable to attend, a substitute delegate is always welcome, subject to confirmation by the organisers and on receipt of the change in writing.

AE3 Media reserves the right to change the programme, speakers, dates or venue at any time, without notice. Should for any reason the venue or speakers change, or the event be cancelled due to an act of terrorism, extreme weather, disease control, industrial action, act of God or any eventuality beyond the control of AE3 Media, we shall endeavour to reschedule; but the client hereby indemnifies AE3 Media and holds AE3 Media harmless from and against any and all costs, damages and expenses, including legal fees, incurred by the client.

AE3 Media will not be liable for damage, loss, injury, accident, annoyance, delay or irregularity, which occurs by reason of any act or default committed by any person or company.

UK law shall apply to any claim against AE3 Media and all proceedings shall be within the exclusive domain of the UK Courts.

The signature of the delegate/visitor or his/her duly authorised agent on the registration form shall signify the delegate/visitor's acceptance of the above conditions and the same shall bind both parties to this contract.